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Bank withdraws ‘redundant’ offset facility

houseandmoneyrates houseandmoneyrates
Reporter 5 minute read

A non-major lender has announced that it has withdrawn its partial offset account from its suite of offerings, effective immediately for all new business.

Heritage Bank has announced that effective today (7 January), it will no longer offer its Loan Offset account, claiming that the product has become “redundant” following the introduction of Online Redraw facility in August 2018.

As a result, Heritage has decided to retire the Loan Offset product from sale. The partial offset product was formerly provided via its standard variable, fixed rate, Home Advantage Variable, and Home Advantage Fixed loan products.*

In a statement to The Adviser, a Heritage spokesperson said: "Heritage has now introduced online redraw capability on our home loans, which actually provide our customers with a better financial outcome and has made the Loan Offset account redundant.


"Previously, customers put excess funds into the offset account and enjoyed a partial reduction in interest on their home loan as a result. The benefit was that they could use the offset account as a transaction account, and deposit and withdraw funds from it as needed.

"Now that we have introduced the online redraw capability on our home loans, customers don’t need an offset account."

The spokesperson added: "Rather, they can deposit excess funds right into their home loan account, and reduce the balance owing. By reducing the balance owing, they also reduce the interest they will incur.  This reduction in interest is greater than the benefit they received from the Loan Offset account, which provided only a partial reduction in interest. And via the online redraw capability, customers can withdraw these excess funds from their loan accounts whenever they like.

"So while we are not closing any existing Loan Offset accounts, we have decided not to open any new ones for customers. Rather, we will set them with online redraw capability and help them enjoy a better outcome for any excess funds they might have available."

The bank also noted that the Mortgage Crusher 100 per cent offset account is still available on the standard variable and Home Advantage Variable products.


Heritage is the latest lender to reduce its product offering after Macquarie announced that, as of early this year, it will discontinue its white-label loan products, after considering “future evolution of the industry”.

Several lenders, including the big four banks, AMP, and Macquarie, have also removed or restricted their self-managed super fund (SMSF) loans from their product suite, in a bid to “simplify” their offerings.

Update: This story was updated on 7th January to emphasise that the withdrawal only impacts the Loan Offset everyday transaction account that offers a partial offset benefit to customers.

[Related: Bank announces new head of broker]

Bank withdraws ‘redundant’ offset facility
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